Freeport's Work Contract Questionable
Friday, 19 May, 2006 | 14:06 WIB

Tempo Interactive, Jakarta: The Supreme Audit Agency (BPK) assumes the composition of PT Freeport Indonesia's work contract is inaccurate so Freeport has the potential to put the state at a loss.

“Review Freeport's royalty payment and regular deposit,” Baharuddin Aritonang, a BPK member, told Tempo yesterday.

The result from BPK's audit on the management of the non-tax state revenue at the Department of Energy and Mineral Resources and Freeport budget year 2004 and the first half of 2005 reveals that Indonesia has not yet received an optimal profit from the work contract of the copper and gold mining project in Papua.

Regarding royalty payment, for example, the government may lose revenues amounting to US$2.23 million. The state also has the potential to lose revenues amounting to US$14.4 million because the Department of Energy and Mineral Resources has been inaccurate in arranging the work contract. The state auditors also conclude that Freeport's royalty payments from 2003 and 2004 was in arrears US$ 369,490.

Baharudin said, the government and the DPR Commission for Mining, especially the Freeport Working Committee, must follow up the findings.

Baharuddin said, if this is not followed up, whether the shortfall of Freeport's deposit and royalty were intentional or not, will never be known. “Mistakes can be made by either Freeport or the government (Department of Energy and Mineral Resources).”

Baharuddin continued, the government must also ask Freeport to pay the deficit. “It is part of Freeport's debt to the state.”

According to Baharuddin, BPK findings can be important input for the government to improve the work contract with Freeport.

The urgency for the government to revise the work contract with Freeport was strengthening these last months. The trigger is the Papuans being dissatisfied with the US mining company's existence. This dissatisfaction resulted in rioting in Abepura and then in Jakarta. Several communities urged the government to audit Freeport and revise its work contract. The DPR then responded by forming the Freeport Working Committee.

Freeport's spokesperson, Siddharta Moersjid, when asked for confirmation yesterday admitted having heard recently about BPK findings. However, he said Freeport's management is prepared to clarify if there is anything from the audit results that needs to be straightened out.

Freeport's management, Siddharta explained, has not received the government's request regarding the shortfall of royalty payment and other deposits. He is certain that Freeport will coordinate with the related officials in Jakarta.

Agus Supriyanto, Budiriza, and Padjar
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